Supreme Court Upholds USPTO ‘Broadest Reasonable Construction’ Standard for IPRs

W. Douglas Hahm

June 22, 2016

On June 20, 2016, the Supreme Court upheld the Federal Circuit’s decision in In re Cuozzo Speed Technologies, LLC., (739 F.3d 1268 (Fed. Cir. 2015)), regarding the claim construction standard used by the USPTO during an inter partes review (IPR) proceeding.

The Supreme Court ruled that the USPTO’s use of the ‘broadest reasonable construction’ standard for claim interpretation was “a reasonable exercise of the rulemaking authority granted to the Patent Office by statute.” In doing so, the the Court rejected Cuozzo’s argument that the USPTO should use the ‘ordinary meaning’ claim construction standard applied by the district courts to avoid both unfairness to a patent holder and inconsistent outcomes in proceedings before the USPTO and US district courts. In particular, the Court noted that patent owners have an opportunity to amend the claims during a review proceeding, and that the patent system has “long provided different tracks for the review and adjudication of patent claims.” Furthermore, the Court rejected the argument that the district court standard was more appropriate because inter partes review is like a judicial proceeding, and listed a number of factors that “suggest that the proceeding offers a second look at an earlier administrative grant of a patent.”

Moreover, the Court wrote that 35 USC §316(a)(4) gives the USPTO legal authority to issue regulations to govern inter partes review proceedings. The Court explained that where there are gaps in a statute, and the statute gives an agency the authority to engage in the rulemaking process, the statute should be interpreted to grant the “agency leeway to enact rules that are reasonable in light of the text, nature and purpose of the statute.” The Court then concluded that the ‘broadest reasonable construction’ standard represents a reasonable exercise of rulemaking authority.

Lastly, the Court stated that they were not addressing the existence of any better claim construction alternative as a matter of policy.

IPR and post grant review (PGR) proceedings were established under the America Invents Act, and can only be requested by a third party (i.e., not the patent owner) attempting to knock out a claim they believe is unduly broad or otherwise unpatentable. Thus, one of the most attractive features of both IPR and PGR proceedings for such a third party is the ‘broadest reasonable construction’ claim interpretation standard, which certainly provides the third party requester with an advantage as compared with the ‘ordinary meaning’ claim interpretation standard applied by district courts.

IPR and PGR proceedings were created as a more efficient and less costly means to obtain critical review of suspect patent claims. If the Supreme Court had not upheld the Federal Circuit’s decision, and had instead held that the USPTO has no basis for the ‘broadest reasonable construction’ standard for claim interpretation, such a decision would have undoubtedly had a chilling effect on the use of these relatively new proceedings.

To view the full decision, please click HERE